The Ethereum Shanghai upgrade is expected to roll out on April 12th. Below is an overview of the ETH Shanghai upgrade and how this will impact ETH participants.
What is the Ethereum Shanghai Upgrade?
The Ethereum Shanghai upgrade is a major upgrade to Ethereum’s Proof of Stake (PoS) consensus mechanism. The most anticipated feature of the upgrade, also known as EIP-4895, will allow network participants to withdraw their staked ETH and ETH staking rewards, which was not previously possible since the launch of the Beacon Chain in December 2020.
What are the benefits of the Ethereum Shanghai Upgrade?
The main benefit of the Ethereum Shanghai upgrade is the implementation of EIP-4895, the headline act of the upcoming Shanghai upgrade, but it’s not the only one. The Ethereum Improvement Proposals introduce other enhancements aimed at reducing transaction fees and benefiting developers.
For instance, EIP-3651 is designed to lower gas costs when developers access the warm COINBASE address list. EIP-3855 seeks to reduce the size of smart contracts and optimize contract code and EIP-3860 limits and meter initcode, setting a gas cost limit.
How do withdrawals work?
Enabling withdrawals on the Ethereum Beacon Chain involves stopping a validator’s participation, freeing up their locked 32 ETH and staking rewards. Withdrawals must be manually initiated by the validator and go through two stages: the exit queue and the withdrawal queue.
The exit queue only applies to full withdrawals, which permit a validator’s complete exit and release of their ETH and rewards, and ensures a secure withdrawal process which prevents network congestion.
Once validators have passed through the exit queue, they can enter the withdrawal queue, a separate queue that handles both full and partial withdrawals, and sends the funds to the designated withdrawal address.
Partial withdrawals of staking rewards beyond the required 32 ETH balance are not required to go through the exit queue and can proceed directly to the withdrawal queue.
How are BitGo clients affected?
BitGo has been actively preparing for the upcoming Shanghai upgrade ensuring all wallets will work seamlessly after the hard fork. Effectively, nothing changes for your BitGo wallets, keys, or ETH.
Current ETH stakers will be able to exit and withdraw their staked balance if they choose to. BitGo and its validator partners will help sign exit transactions. Staked funds will go to the associated ETH withdrawal address after successful exit.
Current ETH holders do not have to do anything. Nothing has changed with the underlying ETH.
BitGo is here to help our clients navigate through this transition period.
Please reach out to your customer success manager or email support@bitgo.com if you need assistance with the Shanghai upgrade.
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